Relief plans swamp budget in red ink
Other projects won’t be cut to free up money, province says
Fallout from the worst flooding in Alberta history will push the provincial government over budget this year, Premier Alison Redford said Monday as she announced the first $1-billion injection of disaster relief.
“Are we sticking to plan to balance the budget? No, we’re not,” Redford said after meeting with the cabinet minister and MLAs that form the province’s Treasury Board.
“The world changed on Thursday morning and I think that as a Treasury Board we’ve come to terms with that,” she said later. “We think Albertans have come to terms with that. This is like nothing we’ve ever faced before and we’re going to respond to the challenge.”
Though the cost of the flood is still being tallied, Redford said the province will do “everything it takes” to restore people’s homes and communities in flood-damaged areas of southern Alberta and Fort McMurray.
A Bank of Montreal analyst pegged preliminary damage estimates between $3 billion and $5 billion on Monday, saying that insured losses are expected to be roughly $2.25 billion to $3.75 billion of the final tally.
But Finance Minister Doug Horner said the province will push ahead with other construction projects already in the 2013-14 budget, even as the province deals with the cost of repairs.
“At this point in time, we’re not talking about taking projects that are needed in our plan out,” Horner said. “But it means the decision that we made to utilize all the financial tools available to us are absolutely paying back in spades, because it allows us to have the cash on hand.”
Horner said the initial $1 billion in flood relief will come from the province’s contingency account, an emergency fund.
The March 7 budget put the fund at $2.7 billion as of March 31. But the 2013-14 budget also planned for the government to spend $2 billion of that in the coming months.
The government budgeted $200 million for disasters in 2013-14.
Horner said there is no question Alberta will have to rewrite its capital plan to include repairs to buildings, roads, bridges and homes. Both he and Redford said Alberta faces five to 10 years of rebuilding to recover from the floods.
That plan could include borrowing money to meet those needs, Horner said.
“I think Albertans … want us to decide what it is we need to build … and then to make the right financial decisions as to how to pay for it, whether that’s cash, whether that’s amortized, whether it’s a bond market issue or perhaps other forms of P3s,” he said.
While news of the first phase of flood assistance will be welcomed in flooded areas of Alberta, other communities will be relieved to hear the province plans to push ahead with other construction projects.
Edmonton city Coun. Ed Gibbons said the massive scale of the devastation in southern Alberta had him worried provincial infrastructure projects would be put on hold. In particular, he had been working with Transportation Minister Ric McIver on funding for heavy haul roads to the Industrial Heartland.
“It was good to hear. There’s an awful lot of work to do to replace the bridges, roads and everything else down there. But at the same time, there’s a lot of roads and bridges here that need replacing,” Gibbons said.
Wildrose and NDP MLAs said Monday there is no question Alberta must spend whatever is needed to recover and rebuild from the flood.
“We don’t have a choice. We have to respond to this. This is an emergency. This is where government does have a role and needs to be spending the money and needs to be generous with it,” Wildrose MLA Rob Anderson said.
But the Wildrose finance critic said it is frustrating the Progressive Conservatives drained Alberta’s contingency fund in recent years to a worrisome level instead of saving it for truly rainy days. Now Alberta will have to go deeper into debt, he said.
“When you spend your savings and rainy day fund on things that aren’t emergencies, when a real emergency does come we’re going to be forced to borrow and borrow lots,” he said.
“We don’t have a choice. We have to do it.”
The Airdrie MLA also questioned the wisdom of pushing ahead with all other planned construction projects in the province given the scale of the disaster.
“My No. 1 concern is they better not in any way shape or form cheap out when it comes to what is needed to rebuild Calgary, High River, the First Nations, Okotoks and other communities. That has to be the No. 1 priority,” he said.
NDP leader Brian Mason said the flood must be a financial priority for the province.
But the Edmonton MLA also worried it will become the latest excuse by the PCs for bad financial decisions, like the socalled bitumen bubble.
“Frankly, I think the province could be balancing its budget if it wasn’t giving handouts to oil companies and other corporations, and implementing massive tax cuts for the very wealthiest people in the province, it could afford to balance the budget and deal with flood relief.”